Housing Secretary Unveils Plan To Aid Inner-City Homebuyers

Published 4:00 am, Friday, August 16, 1996

U.S. Housing Secretary Henry Cisneros yesterday announced a new federal initiative aimed at making the dream of home ownership a reality for thousands of inner-city families across the nation.

The Targeted Urban Homeownership initiative is expected to generate $1 billion in annual mortgage loans. It is estimated that the program will assist about 15,000 families in 72 inner-city communities -- including much of the Oakland flatlands and San Francisco's Bayview-Hunters Point, South of Market, Visitacion Valley and Mission neighborhoods.

Under the program, Ginne Mae will cut the fees it charges lenders for guaranteeing the loans by up to 50 percent for loans to central-city homebuyers. The idea is to give conventional lenders an incentive to aggressively go into communities they have traditionally shied away from -- distressed areas that have high minority populations and lower-income residents.

"This (program) is tightly focused on central cities that have been overlooked in the past," said Cisneros during a home- ownership summit held in downtown Oakland.

Kevin Chavers, president of Ginnie Mae, said that the "vestiges of red-lining" are still apparent in minority and lower-income communities since many lenders do not consider it economically sensible to enter such areas. The Targeted Urban Homeownership initiative, he said, will hopefully "mitigate that caution."

But Frank Franklin, a vice president at Oakland's Community Bank of the Bay, said he was skeptical and wondered if decades of bias could be overcome.

"It's a nice election year thing to say and it gets some people's hopes up but when all has been said and done what is it really going to do?" asked Franklin, whose bank specializes in inner-city loans. "If the people who make decisions on lending money do not take the good intent and use it then it won't work. The government can only do so much."

The program will start this October in 72 inner-city communities that have been previously flagged by HUD as downtrodden areas in need of government tax incentives to attract private enterprise, as well as other housing and redevelopment programs.

The program is just the latest in a multifaceted national plan begun last year to increase home ownership. The plan, known as the National Homeownership Stategy, and the economy are being credited by housing officials for the country's highest home ownership rate in nearly 16 years -- 65.4 percent.